Succession Planning is a Fiduciary ResponsibilityChris Young
January 2, 2009 — 2,041 views
If you are an executive or senior level manager in a publicly held organization, you should already know this, but just in case you forgot: Succession planning is a fiduciary responsibility to your Shareholders.
Remember your Shareholders? That is right... the people who actually own your company and vote for the board of directors that decides if you get to keep your job or not.
While succession planning does not make a lot of financial headlines, it can have a considerable impact on the value of your organization's stock. Remember Management 101? Your job as an executive is to increase the value of your stockholders' investments in your organization and provide positive financial returns.
A perfect example of the fiduciary responsibility executives owe to their stockholders in the form of succession planning is Apple (AAPL).
Yesterday the stock was down 5% on news that Apple was pulling out of the upcoming annual Macworld conference in January and that CEO Steve Jobs would not be delivering the keynote speech at the conference as expected.
This set off a renewed frenzy of speculation about Jobs' health (he was treated for pancreatic cancer in 2004 and recently worried investors with his overly "thin" appearance at a product launch in June) and once again brought to bear the fact that there is no heir-apparent to the leader who is seen by many as irreplaceable. This led nervous investors to unload their shares as a result of the uncertainty surrounding Apple's future leadership.
With all due fairness, Apple could have pulled out of the Macworld conference for any number of reasons that have nothing to do with Jobs' health, and Apple could have a well thought out succession plan in the wings and just has not went public with it.
Here is the catch... investors are nervous, the economy is in the tank, corruption and scandal have become pervasive in both government and on Wall Street, and transparency is a hard thing to come by these days. Quite simply, Stockholders want assurance that their investments are in good hands - not only today, but also in the future.
An executive leadership succession plan is an essential part of assuring stockholders that their investments in an organization will not be blundered.
Key things to consider when developing a leadership succession plan:
- Executive succession planning is not something that can be pawned off on HR (sorry HR).
- Succession planning requires commitment and active involvement from top level executives and managers to develop and prepare the future leaders of your organization.
- It is essential to thoroughly understand the potential of your employees and keep an up to date inventory of the talent that can be tapped in your organization.
- Keep both stockholders and employees "in the loop" as to the future leadership potential within your organization.
- Succession planning is not an item on a to-do list that can be checked off and considered completed. Rather, it is a dynamic and continually evolving process that requires a serious commitment from all members involved to ensure a successful transition of power and leadership.
- It is not enough to simply name the next leader of your organization - this is nothing more than replacement planning. Succession planning is the purposeful creation of a "leadership pipeline" of individuals who have been trained and developed to move to the next level within your organization.
Take a good hard look at your organization's leadership succession plan. Are you prepared for the future? Where can you improve? What can you do different?
Remember... Succession Planning is a fiduciary responsibility!
Now go Maximize Possibility!
The Rainmaker Group is a human talent maximization company specializing in helping organization maximize their bottom lines by improving employee retention, hiring the best talent possible, and strategic talent management and coaching services. From the Fortune 50 corporation to the small medical office, The Rainmaker Group guarantees lasting organizational change via a unique blend of energy, insight, and science to maximize talent, transform organizational culture, and provide strategic intervention.